50th Anniversary of Federal Government’s Failed War on Poverty—Part One

Fifty years after President Johnson launched his “war on poverty,” it is time to stop pretending and start doing something real for the poor.

Mitt Romney said during the 2012 presidential campaign: “I’m not concerned about the very poor. We have a safety net there. If it needs repair, I’ll fix it.”

Can there really be any doubt that it needs fixing?

Don’t expect the government to provide any reliable numbers. The biggest federal poverty program, the Earned Income Tax Credit (EITC) pays 27 million taxpayers $60 billion in cash. But like Section 8 housing vouchers and Medicaid, EITC payments are excluded when the government totes up who is poor and who is not.

It is obvious that the ranks of the poor swelled during and after the Crash of 2008. Average income fell during the Crash and has since fallen more. Paul Krugman is right to call it a “rich man’s recovery.”

Both the poor and the middle class are still in recession. Indeed if unemployment figures were calculated using the same methodology used in the 1930’s, public officials could no longer deny that we are in an ongoing depression.

But for believable numbers about who is poor and who is not, don’t look to the government.

The government is also confusing, it would seem intentionally confusing, about how much it spends in total on the poor. A Senate subcommittee struggled to estimate total spending on the poor and came up with a number of $61,194 per impoverished household per year.

This number is misleading because it includes people who are not really poor, such as students using federal Pell grants for their education, but is still almost three times the federally defined poverty threshold for a family of four. If we take medical spending out, it is still twice the poverty threshold.

Since all this money is clearly not going to the poor, where is it going? A lot of it is presumably supporting well paid federal workers, or indirectly state and local workers, all of whom are in turn protected by powerful public unions.

If we take all federal transfer payments, not just those specifically earmarked for poverty programs, only 36% of the money is reaching the bottom 20% of households by income and even less is reaching the truly poor. And even these figures do not count all the federal subsidies for corporations or the rich.